Ibersol SGPS S A : Consolidated Report & Accounts 1st Quarter 2021 – not audited (view report)

IBERSOL - SGPS, SA

Publicly Listed Company

Registered office: Praça do Bom Sucesso, 105/159, 9th floor, Porto

Share Capital Euros 36.000.000

Commercial Registry: Oporto under number 501669477

Fiscal number: 501669477

Consolidated Report & Accounts

1st Quarter 2021

(not audited)

• Consolidated Turnover of 55.7 million Euros

Decrease of 41.4% over 1st quarter of 2020

• Consolidated EBITDA reached 7.2 million Euros

Ebitda decreased 51.5% over 1st quarter of 2020

• Consolidated net profit of -15.7 million Euros

Decrease of 6.7 million euros when compared to the 1st quarter of 2020

Consolidated Management Report

COVID-19

In the first quarter of 2021, activity was marked in Portugal by the severity of a third Covid-19 wave and by the decree of a new general lockdown in January that lasted until the 19th of April, the second in 10 months, from which resulted in a new period of closure of restaurants and restrictions on those that remained in operation.

During this period, the Group's activity remained conditioned by:

1. closure of restaurants;
2. curfew;
3. limitation of opening hours;
4. restrictions on personal mobility and closure of borders;
5. absence of public at football stadiums and cancellation of events.

In order to mitigate the damages, the working hours were suspended or reduced, the Group's companies in Portugal signed in January, the simplified lay-off and the "Progressive Resume Support" program, which covered about 60% of the employees, while in Spain, it remained with around 49% of employees in ERTE (equivalent to the lay-off), which resulted in support in the amount of 4.3 million Euros.

At the same time, the renegotiation of contracts continued, namely lease agreements aiming at their rebalancing, resulting in discounts of 1.6 million Euros.

In the impossibility of reaching an acceptable agreement with AENA, we were forced to file injunctions to stop AENA from executing bank guarantees that were presented to guarantee the fulfillment of obligations regarding from the lease agreements entered into, as in our understanding contractual rents are not due.

At the beginning of March, these injunctions were decreed. At the same time, we filed a suit in which we asked the court to rebalance the leases, in line with reductions in airport traffic.

In general terms, the declines observed in 2020, during the 1st lockdown were much more expressive than those seen in this one, with a faster recovery pace, despite the important restrictions to the operation of restaurants located in Shopping Centers and Airports.

In Spain, the operating limitations were different from region to region, with Madrid applying tighter restrictions as opposed to what happened in Barcelona.

However, the pace at which existing restrictions and limitations, and especially those affecting mobility between countries, will be lifted is unpredictable, as well as the resumption of consumer

confidence levels, which does not allow to clearly define the moment when will see a recovery in pre-Covid sales levels, particularly in regions with a high proportion of tourist activities.

In this context, the Group, as far as possible, worked in order to keep some restaurants open and to reduce operating costs. At the same time, maintained a close articulation with financial institutions, to negotiate the extension of available financing lines.

Consequently, until April, we took advantage of the extension of the grace periods and State guaranteed funding deadlines:

1. Covid-19economic support funding in Portugal, with 9 further months of grace period and maturity dates, which translates into 4.1 million Euros less expense in the short-term
2. ICO line of 20 million Euros in Spain; 1-year increase in grace period and extension of maturity by 3 more years (2025 to 2028), translating into 2.5 million Euros less expense in the short-term
3. Other ICO Funding in Spain, with a 1-year increase in grace period and maturity, translating into 0.5 million Euros less expense in the short-term
4. Current account ICO lines totalling 15 million Euros extended by 1 year

Activity

Consolidated turnover in the first quarter of 55.7 million Euros, compared to 95.0 million Euros in the first quarter of 2020, which corresponds to a reduction of 41.4%.

At the beginning of the first quarter of 2021, a new lockdown was decreed, which resulted in a new period of closure of the restaurants and limitations to the delivery, take-away and drive-thru services, remaining on March 31 closed about 25% of the total restaurants operated by Ibersol.

Despite the limited opening hours, channels and sales range, the Group maintained a high number of restaurants in operation:

Despite the worsening of mobility restrictions, in the context of combating the third wave of the Covid-19 pandemic, this second lockdown had less significant impacts than occurred in March 2020. However, there were losses and recovery rates with different behaviors, depending on the geography and the weight of the segments operated in each of them.

In Portugal, the effects of the second lockdown were at the level of those registered in June 2020, when restrictive measures had already been lifted, showing a greater responsiveness of our operations and the adaptation of customers to different consumption habits.

In Spain, with a smaller number of restaurants with drives and locations that are more dependent on tourism, sales declines remained the same as in the last quarter of 2020, with a recovery starting in March, with the gradual lifting of restrictions on different regions.

Sales from restaurants located in Angola reflect gains in local currency, which do not include losses due to currency conversion, continuing to be the least penalized by the pandemic outbreak.

In this context, the monthly evolution of sales by segment illustrates the impact of the new lockdown in mid-January and the respective comparison with previous periods.